Residential real estate prices are driven by a wide variety of factors that are local, regional, and national. While basic concepts like supply and demand come into play, other things like mortgage rates, the economy, and seasonal cycles all influence the housing market.
Seasons of real estate
There are months when demand and prices are higher, and months when they are lower. These recurring trends are driven mostly by the timing of the school year and the different seasons. When the weather starts to heat up, so does the market. Home buyers with children generally want to buy in the summer so they can get settled before the school year starts.
The real estate market slows down considerably during the holiday season and the slowdown continues into January and February. Sellers who first put their house on the market during the off-season generally do so because they are under time pressure to sell and are willing to offer deals to buyers. So, while the truly best time to buy a home is when you are financially and psychologically ready, seasonal timing can affect your choices and costs.
Mortgage rates
Mortgage rates have a significant impact on the housing market. When the Federal Reserve raises interest rates, house prices may start to drop as many home buyers avoid buying at that time. The reverse is also true – when mortgage rates are low, buyers may have more money to spend, so home prices may start to rise. When the demand is high, sellers feel confident they can get more money for their homes often leading to bidding wars. This may be stressful for buyers, but bidding wars are an opportunity for sellers.
Inventory shortages
When there are fewer homes for sale, buyers will compete and bid to win the seller’s signature on their purchase agreement. If you don’t mind choosing from a smaller inventory of homes and want to avoid bidding wars, shop for a home during the winter months. You may be able to buy a house at an even lower price than you expected during a holiday week, like Thanksgiving or Christmas because there are usually fewer people buying homes then.
Regional differences
Although these cycles occur to some degree throughout the country, the differences in demand and pricing are more distinct in locations where the changes in seasonal temperatures are also greatest. For example, Florida buyers may not see large differences, whereas buyers in New York are likely to see significant fluctuations in housing availability and pricing.
Buying your house with Bethpage
When you’re ready to buy your dream home, Bethpage is here to help you through the process. Our loan officers will guide and advise you on all the mortgage options to ensure you receive the mortgage loan that best fits your needs. They will also keep you informed throughout the loan process so you feel comfortable every step of the way.
If you are ready to get started, click here to learn more about the pre-qualification process.
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